In Dun & Bradstreet's Barometer of Global Outsourcing, companies reported that between 20% and 25% of all outsourcing relationships fail in any two-year period. Nearly 70% of the respondents noted that the outsourcing supplier didn?t understand what they were supposed to do and that the cost is too high and the service provided too poor.
Client organisations often report feeling disadvantaged regarding their limited experience in performing many sourcing tasks.
- Inability of clients to adequately express their needs.
- Ambiguity in scope or the definition of services.
- Difficulties in defining service levels.
- Poorly written contracts are a common cause of failure in sourcing.
- Uncertaunty about the service provider's true capability.
WHAT TO DO
Use risk management, capability improvement and performance measurement to:
- Assist in building capability to outsource.
- Perform due dilligence on the service provider's capability.
- Assist service providers build their capability in line with client expectations.
- Buildng capability in the client organiations is essential for successful outsourcing.
- Service provider performance should be measured against the business' expectations.